Is Facebook Growing Up Too Fast?

BRAD STONE

Sunday

Mar 29, 2009 at 4:27 AM

Facebook soon expects to add its 200 millionth user. As it manages its growth, it must balance an increasingly disparate audience.

WHEN Facebook signed up its 100 millionth member last August, its employees spread out in two parks in Palo Alto, Calif., for a huge barbecue. Sometime this week, this five-year-old start-up, born in a dorm room at Harvard, expects to register its 200 millionth user.

That staggering growth rate — doubling in size in just eight months — suggests Facebook is rapidly becoming the Web’s dominant social ecosystem and an essential personal and business networking tool in much of the wired world.

Yet Facebook executives say they aren’t planning to observe their latest milestone in any significant way. It is, perhaps, a poor time to celebrate. The company that has given users new ways to connect and speak truth to power now often finds itself as the target of that formidable grass-roots firepower — most recently over controversial changes it made to users’ home pages.

As Facebook expands, it’s also struggling to match the momentum of hot new start-ups like Twitter, the micro-blogging service, while managing the expectations of young, tech-savvy early adopters, attracting mainstream moms and dads, and justifying its hype-carbonated valuation.

By any measure, Facebook’s growth is a great accomplishment. The crew of Mark Zuckerberg, the company’s 24-year-old co-founder and chief executive, is signing up nearly a million new members a day, and now more than 70 percent of the service’s members live overseas, in countries like Italy, the Czech Republic and Indonesia. Facebook’s ranks in those countries swelled last year after the company offered its site in their languages.

All of this mojo puts Facebook on a par with other groundbreaking — and wildly popular — Internet services like free e-mail, Google, the online calling network Skype and e-commerce sites like eBay. But Facebook promises to change how we communicate even more fundamentally, in part by digitally mapping and linking peripatetic people across space and time, allowing them to publicly share myriad and often very personal elements of their lives.

Unlike search engines, which ably track prominent Internet presences, Facebook reconnects regular folks with old friends and strengthens their bonds with new pals — even if the glue is nothing more than embarrassing old pictures or memories of their second-grade teacher.

Facebook can also help rebuild families. Karen Haber, a mother of two living outside Tel Aviv, logs onto Facebook each night after she puts the children to bed. She searches for her family’s various surnames, looking for relatives from the once-vast Bachenheimer clan of northern Germany, which fractured during the Holocaust and then dispersed around the globe.

Among the three dozen or so connections she has made on Facebook over the last year are a fifth cousin who is a clinical social worker in Woodstock, N.Y.; a fourth cousin running an eyeglasses store in Zurich; and another fifth cousin, living in Hong Kong selling diamonds. Now she shares memories, photographs and updates with them.

“I was never into genealogy and now suddenly I have this tool that helps me find the descendants of people that my grandparents knew, people who share the same truth I do,” Ms. Haber says. “I’m using Facebook and trying to unite this family.”

Facebook has also become a vehicle for broad-based activism — like the people who organized on the site last year and mobilized 12 million people to march in protests around the globe against practices of the FARC rebels in Colombia.

Discussing Facebook’s connective tissue, Mr. Zuckerberg recalls the story of Claus Drachmann, a schoolteacher in northern Denmark who became a Facebook friend of Anders Fogh Rasmussen, Denmark’s prime minister. Mr. Drachmann subsequently invited Mr. Rasmussen to speak to his class of special-needs children; the prime minister obliged last fall.

Mr. Zuckerberg says the story illustrates Facebook’s power to cut through arbitrary social barriers. “This represents a generational shift in technology,” he says. “To me, what is interesting was that it was possible for a regular person to reach the prime minister and that that interaction happened.”

As Facebook has matured, so has Mr. Zuckerberg. He has recently traded his disheveled, unassuming image for an ever-present tie and making visits to media outfits like “The Oprah Winfrey Show.” And he says Facebook’s most important metrics are not its membership but the percentage of the wired world that uses the site and the amount of information — photographs, news articles and status updates — zipping across its servers.

Facebook’s mission, he says, is to be used by everyone in the world to share information seamlessly. “Two hundred million in a world of six billion is tiny,” he says. “It’s a cool milestone. It’s great that we reached that, especially in such a short amount of time. But there is so much more to do.”

AS Facebook stampedes along, it still has to get out of its own way to soothe the injured feelings of users like Liz Rabban.

Ms. Rabban, 40, a real estate agent and the mother of two from Livingston, N.J., joined the site in November 2007, quickly amassing 250 friends and spending hours on the site each day.

But these days, she spends less time on the site and posts caustic comments about Facebook’s new design, which turns a majority of every user’s home page into a long “stream” of recent, often trivial, Twitter-like updates from friends.

“The changes just feel very juvenile,” Ms. Rabban says. “It’s just not addressing the needs of my generation and my peers. In my circle, everyone is pretty devastated about it.”

Ms. Rabban is not alone. More than two and a half million dissenters have joined a group on Facebook’s own site called “Millions Against Facebook’s New Layout and Terms of Service.” Others are lambasting the changes in their own status updates, which are now, ironically, distributed much more visibly to all of their Facebook friends.

The changes, Facebook executives say, are intended to make the act of sharing — not just information about themselves but what people are doing now — easier, faster and more urgent. Chris Cox, 26, Facebook’s director of products and a confidant of Mr. Zuckerberg, envisions users announcing where they are going to lunch as they leave their computers so friends can see the updates and join them.

“That is the kind of thing that is not meaningful when it is announced 40 minutes later,” he says.

The simmering conflict over the design change speaks to the challenges of pleasing 200 million users, many of whom feel pride of ownership because they helped to build the site with free labor and very personal contributions.

“They have a strange problem,” says S. Shyam Sundar, co-director of the Media Effects Research Laboratory at Pennsylvania State University, of Facebook’s quandary. “This is a technology that has inherently generated community, and it has gotten to the point where members of that community feel not only vested but empowered to challenge the company.”

Those tensions boiled up previously, when Facebook announced the intrusive Beacon advertising system in 2007, and again when Facebook introduced new service terms earlier this year, which appeared to give the company broad commercial control over the content people uploaded to the site.

Facebook responded to protests over the second move by promising users a vote in how the site would be governed.

But while Facebook is willing to give users a voice, it doesn’t necessarily want to listen.

Users are widely opposed to terms that grant Facebook the right to license, copy and disseminate members’ content worldwide. But Facebook says it has to ignore those objections to protect itself against lawsuits from users who might blame the company if they later regret having shared some piece of information with their friends. (Other Web sites have similar stipulations.)

While Facebook addressed the feedback on its unpopular design changes last week — partly by saying it would give users more control over the stream of updates that appear on their pages — it also said members’ pages would soon become even busier and more dynamic, updating automatically instead of requiring users to refresh their browsers to see new posts.

That’s a change that may irk users like Ms. Rabban, who don’t like how busy their pages have become. Facebook executives counter that it will help users share more information, and that they will eventually come to appreciate it, just as they have with previous changes that were initially jarring.

“It’s not a democracy,” Mr. Cox says of his company’s relationship with users. “We are here to build an Internet medium for communicating and we think we have enough perspective to do that and be caretakers of that vision.”

PEOPLE, of course, sometimes like to keep secrets and maintain separate social realms — or at least a modicum of their privacy. But Facebook at almost 200 million members is a force that reinvents and tears at such boundaries. Teachers are yoked together with students, parents with their children, employers with their employees.

Uniting disparate groups on a single Internet service runs counter to 50 years of research by sociologists into what is known as “homophily” — the tendency of individuals to associate only with like-minded people of similar age and ethnicity.

Facebook’s huge growth is creating inevitable collisions as the whole notion of “friend” takes on a highly elastic meaning. When the Philadelphia Eagles allowed the star safety Brian Dawkins to leave for the Denver Broncos earlier this month, Dan Leone, a gate chief at Lincoln Financial Field, the Eagles’ stadium, expressed his disappointment by referring to the situation with an obscenity on his Facebook status update.

Mr. Leone’s boss, who was his Facebook friend, forwarded the update to an Eagles guest services manager, who fired him. The team has since refused to reconsider the matter, despite Mr. Leone’s deep remorse and his star turn on countless radio talk shows across the country to discuss the situation.

“If you know your boss is online, or anyone close to your boss is online, don’t be making comments that can be detrimental to your employment,” Mr. Leone advises.

Facebook is trying to teach members to use privacy settings to manage their network so they can speak discreetly only to certain friends, like co-workers or family members, as opposed to other “friends” like bosses or professional colleagues. But most Facebook users haven’t taken advantage of the privacy settings; the company estimates that only 20 percent of its members use them.

Other problems are trickier, especially among true friends and family members. How, for example, can Facebook remain a place for teenagers to share what they did on Saturday night when it is also the place where their parents are swapping investment tips with old friends?

In the six weeks since Rich Hall, a 52-year-old theater manager in Mount Carroll, Ill., joined Facebook, he has reconnected with more than 400 friends and acquaintances, including former high school friends, his auto mechanic and former buddies from his days as a stock car driver.

In the course of his new half-hour-a-day Facebook habit, Mr. Hall also “friended” the 60 high school students he is directing in a school play, so he could coordinate rehearsal times. That led some of them to deny his request because, as he says they told him, their parents “found it creepy.” Along the way, Mr. Hall also found photographs of his 19-year-old son on the site, drinking beer at a Friday night bonfire.

“He denied it and said he wasn’t there,” Mr. Hall says. “I said, ‘Let’s go to this page together and look at these photos.’ Of course he did it. There are no secrets anymore.”

Dwindling secrets, and prying eyes, are at the heart of the Facebook conundrum. While offering an efficient and far-reaching way for people to bond, the site has also eroded sometimes natural barriers.

“People usually spend a lot of time trying to be separate — parents and children are a good example,” says Danah Boyd, a social scientist who has studied social networks and now works in the research department of Microsoft, which has invested in Facebook. “You are already seeing young people sitting there thinking, ‘Why am I hanging out with my mother who is reminiscing with her high school mates?’ You are seeing some reticence with young people that wasn’t there two years ago.”

For their part, Facebook executives say they are less interested in being cool than in being a useful place where anyone can go to share elements of their lives.

“The people who started the company weren’t cool. I’m not cool,” Mr. Cox says. “If you look at the people who work here, it’s much more nerdy and curious than cool.

“Cool only lasts for so long, but being useful is something that applies to everyone.”

MR. ZUCKERBERG hopes that being ubiquitous and useful translates to the bottom line.

Though Facebook is privately held and doesn’t publicly disclose its earnings, various press and analysts’ estimates of its 2008 revenues span from $250 million to $400 million. That range may not be enough to cover the company’s escalating expenses, and it hardly justifies some of the atmospheric valuations that have been placed on the start-up, including the $15 billion that Microsoft assigned to the company when it invested in it in 2007.

Facebook’s financial challenges aren’t unique. Popular free e-mail services like Hotmail from Microsoft and Gmail from Google have little in the way of profits to show for their vast audiences, aside from a few text ads that people rarely click on. Instant messaging networks like Microsoft Messenger and AIM from American Online are similarly popular but have never been hyperprofitable, for the simple reason that people do not want intrusive ads inserted into personal conversations.

Facebook’s approach is to invite advertisers to join in the conversation. New “engagement” ads ask users to become fans of products and companies — sometimes with the promise of discounts. If a person gives in, that commercial allegiance is then broadcast to all of the person’s friends on the site.

A new kind of engagement ad, now being tested, will invite people to vote — “what’s your favorite color M&M?” for example — and brands will pay every time a Facebook member participates.

“We are trying to provide the antidote for the consumer rebellion against interruptive advertising,” says Sheryl Sandberg, Facebook’s chief operating officer and Mr. Zuckerberg’s business consigliere.

Ms. Sandberg, who ran Google’s highly successful advertising initiatives before leaving the search giant to join Facebook, said her company’s revenue was growing despite a brutal downturn that is hurting other kinds of online advertising. She also puts one rumor to rest, saying the company is not considering charging members for any aspect of its service.

“We’re pretty pleased with the overall trajectory,” she says. “Our conversations with big advertisers have broadened in scope and we also have more people asking about how they can work with us.”

Facebook recently introduced advertising tools to let companies focus on users based on the language they use on the site and their geographic location. So, for example, an advertiser can now tailor a message to the Latino community in Los Angeles or French speakers in Montreal.

Despite the gloom permeating much of the advertising world, and the formidable challenges facing the site, some advertisers say they glimpse the future in Facebook’s brand of interactive advertising.

“Our clients all want to see if they can make this work,” says Al Cadena, the interactive account director at Threshold Interactive in Los Angeles, which represents companies like Nestlé, Honda and Sony. “Advertising used to be a one-way communication from advertiser to consumer, but now people want to have a dialogue. And Facebook is becoming the default way to do that, not only in the States but really for the whole world.”

Internet evangelists say that when a technology diffuses into society, as Facebook appears to be doing, it has achieved “critical mass.” The sheer presence of all their friends, family and colleagues on Facebook creates potent ties between users and the site — ties that are hard to break even when people want to break them.

Many who have tried to free themselves of their daily Facebook habit and leave the site, like Kerry Docherty, a student at Pepperdine University’s law school, speak of a powerful gravitational pull and an undercurrent of peer pressure that eventually brings them back.

“People gave me a hard time for leaving Facebook,” says Ms. Docherty, who quit at the end of 2007 but then rejoined six months later. “Everyone has a love-hate relationship with it. They wanted me to be wasting my time on it just like they were wasting their time on it.”

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